02407cam a22002657 4500001000600000003000500006005001700011008004100028100002100069245010100090260006600191490004100257500001600298520123100314530006101545538007201606538003601678690008101714690013701795700001801932710004201950830007601992856003702068856003602105w9582NBER20150802163256.0150802s2003 mau||||fs|||| 000 0 eng d1 aFisman, Raymond.10aFinancial Dependence and Growth Revisitedh[electronic resource] /cRaymond Fisman, Inessa Love. aCambridge, Mass.bNational Bureau of Economic Researchc2003.1 aNBER working paper seriesvno. w9582 aMarch 2003.3 aIn this note, we revisit an earlier, highly influential paper on Financial Dependence and Growth by Rajan and Zingales (1998), by re-examining their assumptions, and the robustness of their results to alternative theories and interpretations. We first show that they may be implicitly testing whether financial intermediaries allow firms to better respond to global shocks to growth opportunities, rather than the extent that financial intermediaries allow firms to grow in industries with an inherent (technological) financial dependence. Furthermore, if this is the case, we claim that there exists a more direct measure of growth opportunities. In particular, if U.S. capital markets are perfect, then actual growth in the U.S. is a good proxy for global growth opportunities. We test this directly, by including U.S. industry growth in Rajan and Zingales' original specification, and find that our direct growth measure outperforms their financial dependence measure and, moreover, is less vulnerable to controlling for outliers and level of development. This still suggests an important role for finance in the allocation of resources, but shifts the emphasis from 'financial dependence' to 'global growth opportunities.' aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aG15 - International Financial Markets2Journal of Economic Literature class. 7aG21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages2Journal of Economic Literature class.1 aLove, Inessa.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w9582.4 uhttp://www.nber.org/papers/w958241uhttp://dx.doi.org/10.3386/w9582